Microsoft misses quarterly profit target, job cuts possible

When Microsoft posts its quarterly profit on Thursday, it is expected that it will have missed the company's own target for the quarter, prompting speculation that the company could soon announce thousands of job cuts.

Microsoft forecast a profit of 51 cents to 53 cents a share for the quarter, however analysts reckon that the actual profit for the quarter ending December 31 will be just 49 cents a share. According to estimates from Reuters, quarterly revenue is expected to be $17.1 billion, lower than Microsoft's target of $17.3 billion to $17.8 billion, as the company faces reduced demand in many of its key markets, such as new PCs, business software and video games.

Analysts expect Microsoft will announce job cuts to reduce costs, following in the steps of many other technology firms such as AMD, Sony and Sun Microsystems.

McAdams Wright Ragen analyst Sid Parakh said, "Checks indicate that Microsoft is likely to engage in headcount reductions to the tune of 6,000 to 8,000 employees or 6 percent to 8 percent of its 95,000 workforce. Our checks also revealed some speculation over the potential for a second round of cuts in some groups sometime later in the year."

Other analysts reckon that the cost reductions could occur over a longer period of time, with more targeted cutbacks instead of a large lay-off.

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19 Comments

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All things considered but they seemed to have done pretty well if those are infact the margins that they missed their expected forecast by. I'm sure many shareholders will be over the moon to get 49c from an expected 51c when you take into account what is going on at other companies at this very moment. 0.2billion less in revenue again seems pretty darn small really, especially when you think about how 18 months or so ago they threw aside 1billion to fix issues relating to the XBox.

Heres hoping they don't have to lay off the staff but or at least not in the quantities that some articles have predicted. I don't think we need more people losing their jobs currently.

Too bad we can't all just wait one more day to see what the actual profits were before jumping to conclusions.

Only recently - since I bought MSFT shares, have they been paying dividends. Up until about 5 years ago, the only money people made from MSFT shares was the stock price going up. They also divided the stock seven times if I remember correctly.

Microsoft shares have done nothing for 7 years, and like all stocks, have tanked in the last year. Their paltry profit of 50 cents on (declining) shares, costing $18 does not look great to me (or the market!)

Ok so explain me something..

Did Microsoft lost money with this earnings speculated?

I mean there's so much speculation about cuts in jobs at Microsoft, but half a year ago they had 40 Billion $ to offer for yahoo..

I just don't get what's wrong with Microsoft, that so many people think and speak it's like they are going bankruptcy..

This is financial lingo meaning Microsoft did not meet their predicted money-making targets for the last quarter.

It is not money "lost." It is money "not made" (as computed on a per-share basis). It simply means that major companies did NOT upgrade to Windows Vista or consumers did NOT buy as many Zunes or 360's as one would have anticipated 3-6 months ago.

Nobody is panicking except for those who MIGHT lose a job. Then again, some of them are not helping Microsoft make any money!

Is it just me or something is wrong aou t fact that MS is announcing earnings tomorrow, ut yet today, we have the "Microsot misses" stated as a fact already?

How about "Micosot expected to miss"?

Also - a company that is still able to turn 8 bils in profit in this stage I'd think is admirable from investment point of view...

Like banks, MS have had years and years of unfathomable profit. So why is it when they miss a single target, they have to start firing people?

What do these companies do with all that money?

Profit is distributed to shareholders. Investors are not charity. They do not put large sums of money into a company to get nothing out of it. The board are responsible for keeping the shareholders happy. That 2 cents difference may not sound like a huge sum, but to someone holding 500,000 shares in Microsoft, it soon adds up.

Shareholders demand performance year on year, and i'm sure that getting rid of employees would not be happening if everyone was doing their job properly, and profitably. We don't know the extent of any job losses (as there are only rumours at this time), but its fair to assume staff that will go will be staff that are duplicating roles, or working in none profit making departments.

Unlike banks MS is still making huge profits, but to keep this sustainable (unlike banks!!) it has to protect its interests fully and make moves that are likely unpopular. The market is hugely unstable at the moment, and to have any hope in the future of re-recruiting from the many that are loosing their jobs in the current climate, big companies have to trim some of the flab off now so they can survive to that point. As the climate settles, the flab will re-aquire, and in 20 years we'll go through the whole process again.

tiddlie said,
Profit is distributed to shareholders. Investors are not charity. They do not put large sums of money into a company to get nothing out of it. The board are responsible for keeping the shareholders happy. That 2 cents difference may not sound like a huge sum, but to someone holding 500,000 shares in Microsoft, it soon adds up.

Shareholders demand performance year on year, and i'm sure that getting rid of employees would not be happening if everyone was doing their job properly, and profitably. We don't know the extent of any job losses (as there are only rumours at this time), but its fair to assume staff that will go will be staff that are duplicating roles, or working in none profit making departments.

Unlike banks MS is still making huge profits, but to keep this sustainable (unlike banks!!) it has to protect its interests fully and make moves that are likely unpopular. The market is hugely unstable at the moment, and to have any hope in the future of re-recruiting from the many that are loosing their jobs in the current climate, big companies have to trim some of the flab off now so they can survive to that point. As the climate settles, the flab will re-aquire, and in 20 years we'll go through the whole process again.


That 0.02 cent profit per share loss means that 2 million dollars of investor dividend has been lost.

You have to also remember that microsoft's share price has dropped almost 10 dollars in the last few months.

For a company with 90million shareholders, 4 months ago it had 125 million sharehoulders, thats almost 900 million - 1 billion dollars of investor money lost.

Shareholders, will of course, not be happy with that and demand results.

It's 2 cents per share loss, not 0.02 cent.

Microsoft have issued 8,895,570,000 shares, so i'm not sure how you get a 2 million dollar loss of dividend based on 2 cents per share.

tiddlie said,
It's 2 cents per share loss, not 0.02 cent.

Microsoft have issued 8,895,570,000 shares, so i'm not sure how you get a 2 million dollar loss of dividend based on 2 cents per share.


Oops, yes i meant 0.02 dollars

MSFT Share Volume: 68,292,071

Dropped 12-20 overnight =/